Herman E. Daly: A Steady-State Economy

Also, if expansion is to be mainly for the sake of the poor it must be comprised of goods the poor need—clothing, shelter, and food on the plate, not ten thousand recipes on the Internet. In addition, as a larger proportion of GDP becomes less material-intensive, the terms of trade between more and less material-intensive goods will move against the less material-intensive, limiting incentive to produce them. Even providers of information services spend most of their income on cars, houses, and trips, rather than the immaterial product of other symbol manipulators.

Can a SSE maintain full employment? A tough question, but infairness one must also ask if full employment is achievable in a growth economy driven by free trade, off-shoring practices, easy immigration of cheap labor, and widespread automation? In a SSE maintenance and repair
become more important. Being more labor intensive than new production and relatively protected from off-shoring, these services may provide more employment. Yet a more radical rethinking of how people earn income may be required. If automation and off-shoring of jobs increase profits but not wages, then the principle of distributing income through jobs becomes less tenable. A practical solution (in addition to slowing automation and off-shoring) may be to have wider participation in the
ownership of businesses, so that individuals earn income through their share of the business instead of through fulltime employment. Also the gains from technical progress should be taken in the form of more leisure rather than more production—a long expected but under-realized possibility.

What sort of tax system would best fit a SSE? Ecological tax reform, already mentioned, suggests shifting the tax base away from value added (income earned by labor and capital), and on to “that to
which value is added”, namely the throughput flow, preferably at the depletion end (at the mine-mouth or well-head, the point of “severance” from the ground). Many states have severance taxes. Taxing the origin and narrowest point in the throughput flow, induces more efficient resource use in production as well as consumption, and facilitates monitoring and collection. Taxing what we want less of (depletion and pollution), and ceasing to tax what we want more of (income, value
added) would seem reasonable—as the bumper sticker puts it, “tax bads, not goods”. The shift could be revenue neutral and gradual. Begin for example by forgoing $x revenue from the worst income tax we have.